Report to Congressional Committees 

United States General Accounting Office 

GAO 

April 2003 DEFENSE 

TRANSPORTATION 

Monitoring Costs and 

Benefits Needed While 

Implementing a New 

Program for Moving 

Household Goods 

GAO-03-367 
The recommendations in DOD’s report to Congress have the potential to resolve 

several long-standing problems found in the current personal property program, 

which manages the transportation and storage of household goods. The 

recommendations, if implemented, would 

• reengineer the claims process to reduce the length of time it currently 

takes to resolve claims for lost, destroyed, or damaged household goods 

and increase the reimbursement rates that military personnel currently 

receive for their losses; 

• use performance-based service contracts to improve the generally low 

quality of service that DOD currently gets from the moving industry; and 

• put in place new information technology with interface capabilities to 

enable program managers and users to monitor in-transit shipments and 

track the number and cost of shipments processed each year. 

The recommendations in DOD’s report to Congress are supported by the 

Transportation Command’s evaluation of the pilot programs’ findings and should 

be implemented within budget constraints. DOD’s approach in conducting the 

evaluation was methodologically sound: It developed an evaluation plan to guide 

its work and adjusted the plan when necessary to address differences in the pilot 

programs’ approaches. While the shipments included in the evaluation do not 

represent all shipment types managed annually by DOD, GAO believes that the 

evaluation results provide sufficient information to allow DOD to initiate actions 

to improve its current personal property program. 

GAO found that the soundness of methodologies used to develop DOD’s cost 

estimates varied. Therefore, DOD’s ability to implement changes to the existing 

program within the cost estimates DOD reported to Congress is uncertain. GAO 

found that the estimate to implement the information technology 

recommendation was $7 million rather than the $4 million to $6 million estimate 

DOD reported to Congress. In developing cost estimates for the remaining 

recommendations, DOD did not provide the same level of evidentiary support 

for one of the three adjustments it used to align the pilot programs’ costs to 

current program costs. As a result, GAO questions the extent to which these 

recommendations can be implemented within DOD’s estimated 13 percent 

increase over current program costs. While DOD believes it used a conservative 

approach in developing this 13 percent estimate, it has not quantified the risk 

associated with the projection, which could provide the military services and 

Congress information needed to develop and review future budget requests for 

this program. Without providing the range of possible cost increases and the risk 

regarding the likelihood of achieving this 13 percent projection within that 

range, DOD may find a repeat of what occurred during the pilots, where the 

military services terminated participation in one of the pilot programs due to 

costs exceeding projections. 

GAO also found that without carefully monitoring costs during the 

implementation phase and assessing costs and benefits from a period 

succeeding full implementation of the recommendations, DOD would not have 

the information needed to determine if anticipated improvements in the program 

are being achieved at a reasonable cost. 

DEFENSE TRANSPORTATION

Monitoring Costs and Benefits Needed 

While Implementing a New Program for 

Moving Household Goods 

www.gao.gov/cgi-bin/getrpt?GAO-03-367.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis 

at (202) 512-8365 or solisw@gao.gov. 

Highlights of GAO-03-367, a report to 

Congressional Committees. 

April 2003

The Department of Defense (DOD) 

spends more than $1.7 billion each 

year to move and store over 

600,000 household goods 

shipments when relocating military 

personnel. It conducted and 

evaluated several pilot program 

studies aimed at fixing its problemplagued program and, in 2002, 

issued a report to Congress with 

three recommendations. The 1997 

Defense Appropriations Act 

Conference Report directed GAO 

to validate the results achieved by 

the pilot programs. In response, 

GAO examined the extent to which 

DOD’s recommendations to 

Congress (1) offer solutions to 

long-standing problems in the 

current program and (2) are 

supported by the evaluation’s 

findings and should be 

implemented. GAO also assessed 

the soundness of methodologies 

used by DOD to develop cost 

estimates to implement the 

recommendations. 

GAO recommends that DOD 

implement the recommendations 

within budget constraints, quantify 

the risk associated with achieving 

its cost estimates, monitor costs 

during the implementation phase, 

and assess the new program to 

determine if anticipated 

improvements were achieved at a 

reasonable cost. DOD agreed with 

three recommendations, but did not 

agree with the need to quantify the 

risk associated with achieving its 

cost estimates.
Page i GAO-03-367 Defense Transportation 

Letter 1

Results in Brief 2

Background 5

DOD’s Recommendations Offer Solutions to Long-Standing 

Problems 8

Transportation Command’s Evaluation of Pilot Programs Supports 

DOD’s Three Recommendations 13

Ability to Implement New Program within Cost Estimates Reported 

to Congress Is Uncertain 16

Conclusions 21

Recommendations for Executive Action 22

Agency Comments and Our Evaluation 23

Appendix I Scope and Methodology 28 

Appendix II Overview of Current Personal Property Program 

and Pilot Programs 32 

Current Program 34

Military Traffic Management Command’s Reengineered Personal 

Property Program 36

The Department of Defense’s Full Service Moving Project 39

Navy’s Service Member Arranged Move Pilot Program 42

Appendix III Comments from the Department of Defense 45 

Related GAO Products 49 

Tables 

Table 1: Claims-Related Features of the Current Personal Property 

Program and Pilot Programs 32

Table 2: Quality of Service-Related Features of the Current 

Personal Property Program and Pilot Programs 33

Table 3: Data Reliability-Related Features of the Current Personal 

Property Program and Pilot Programs 34

Contents 
Page ii GAO-03-367 Defense Transportation 

This is a work of the U.S. Government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. It may contain copyrighted graphics, images or other materials. 

Permission from the copyright holder may be necessary should you wish to reproduce 

copyrighted materials separately from GAO’s product. 
Page 1 GAO-03-367 Defense Transportation 

April 18, 2003 

Congressional Committees 

Military personnel and their families can expect to relocate many times 

during a service member’s career. As the moving industry’s single largest 

customer, the Department of Defense (DOD) spends more than $1.7 billion 

annually for its personal property program, which provides household 

goods transportation and storage services for military personnel and their 

families when they relocate. The program manages more than 600,000 

personal property shipments each year. DOD has experienced longstanding problems with its current personal property program, including 

excessive loss or damage to property, high claims costs incurred by the 

government, and poor quality of service from moving companies. 

Moreover, the program’s data management system does not provide 

reliable information on the status of individual shipments or on the types 

of shipments and their costs. 

In an effort to test alternative approaches and improve the quality of its 

personal property program, DOD has carried out several initiatives over 

the past 8 years. In 2000, the U.S. Transportation Command1

 began to 

collect data from one of the three pilot programs to evaluate alternative 

approaches for improving the current program.2

 The Transportation 

Command compared the features of the current program with those of the 

three pilot programs, and in June 2002 it submitted a report to the Deputy 

Under Secretary of Defense (Logistics) outlining its evaluation strategy, 

findings, and recommendations. In its November 12, 2002, report to 

Congress, DOD included the three recommendations resulting from the 

evaluation and the estimated additional costs required to implement 

program improvements based on a subsequent assessment of pilot and 

current programs’ operations. 

 1

 The Deputy Under Secretary of Defense (Logistics) tasked the U.S. Transportation 

Command to evaluate alternatives and develop recommendations to enhance the 

department’s current personal property program. 

2

 The three pilots included in the evaluation are the Military Traffic Management 

Command’s Reengineered Personal Property Program, the Department of Defense’s Full 

Service Moving Project, and the Navy’s Service Member Arranged Move Pilot Program. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-367 Defense Transportation 

Our involvement in this issue stems from the conference report on the 

1997 Defense Appropriations Act, which directed us to review the data 

collected from the pilot programs and validate the results before DOD 

expands any of the pilot programs, and a subsequent request from the 

Subcommittee on Readiness of the House Committee on Armed Services. 

This report supplements our previous testimony3

 on DOD’s efforts to 

enhance its current program, as well as our status report4

 and status 

briefings to Congress on DOD’s efforts to implement a methodologically 

sound evaluation of the pilot programs. As agreed with your offices, for 

this report we assessed the extent to which the recommendations in 

DOD’s November 2002 report (1) offer solutions to long-standing problems 

in the personal property program and (2) are supported by the evaluation’s 

findings and should be implemented. In addition, we assessed the 

soundness of the methodology used by DOD to develop the cost estimates 

for implementing the recommendations. 

To conduct our assessment of DOD’s three recommendations to Congress, 

we reviewed DOD and GAO prior reports on the personal property 

program, interviewed DOD officials and private-sector contractors 

involved in the current and pilot personal property programs and the 

Transportation Command’s evaluation, examined the methodology and 

findings of the Transportation Command’s evaluation of the three pilot 

programs, reviewed the methodology and data generated by each of the 

three pilot programs, and assessed the methodologies used to develop the 

cost estimates for implementing DOD’s recommendations. We did not 

make an assessment of whether the anticipated benefits to be derived 

from implementing the three recommendations would warrant the 

additional costs DOD projects will be required to fund these 

improvements. The scope and methodology we used in our review are 

described in further detail in appendix I. 

The three recommendations in DOD’s report to Congress offer solutions to 

several long-standing problems in the current personal property program. 

Specifically, the recommendations address previously identified problems 

with the liability/claims process (including the lengthy claims process, 

 3

 U.S. General Accounting Office, Defense Transportation: Efforts to Improve DOD’s 

Personal Property Program, GAO/T-NSIAD-99-106 (Washington, D.C.: Mar. 18, 1999). 

4

 U.S. General Accounting Office, Defense Transportation: Final Evaluation Plan Is 

Needed to Assess Alternatives to the Current Personal Property Program, 

GAO/NSIAD-00-217R (Washington, D.C.: Sept. 27, 2000). 

Results in Brief 
Page 3 GAO-03-367 Defense Transportation 

reimbursement rates that may not fully compensate service members for 

loss and damage incurred during their moves, and high claims costs to the 

government), the low quality of shipping services, and the inability to track 

shipments and their costs. If implemented, DOD’s first recommendation—

to reengineer the claims process—has the potential to reduce the length of 

time it currently takes to resolve claims for lost, destroyed, or damaged

household property and increase the reimbursement rates that military 

personnel currently receive for their losses. The recommendation also has 

the potential to reduce the high cost of claims incurred by DOD. The 

second recommendation—to use performance-based service contracts—

has the potential to improve the generally low quality of service that DOD 

currently receives from moving companies. The third recommendation—

to put in place new information technology with interface capabilities—

has the potential to enable the personal property program managers and 

other users of the program to reliably monitor in-transit shipments and 

track the number and the cost of shipments processed each year so that 

accurate reporting can be provided to DOD and Congress. 

The recommendations in DOD’s report to Congress are supported by the 

Transportation Command’s evaluation of the pilot programs’ findings and 

should be implemented within budget constraints. We found that the 

Transportation Command’s approach in conducting the evaluation was 

methodologically sound: It developed an evaluation plan to guide its work 

and adjusted the plan when necessary to address differences in the pilot 

programs’ approaches. While the shipments included in the evaluation do 

not represent all shipment types managed annually by DOD, we believe 

that the evaluation results provide sufficient information to allow DOD to 

initiate actions to improve its current personal property program. 

Our review showed that the soundness of the methodologies used by DOD 

to develop cost estimates for implementing the three recommendations 

varied. Therefore, DOD’s ability to implement changes to the existing 

program within the cost estimates reported to Congress is uncertain. Our 

review found that the total initial cost for implementing the information 

technology improvements recommendation would more likely be 

$7 million rather than DOD’s $4 million to $6 million estimate. We agreed 

that the premise of two of three adjustments DOD used to develop the 

13 percent cost increase to implement the claims process and 

performance-based service contract recommendations was sound. 

However, we are less assured about the extent to which the projected cost 

savings related to a third adjustment may occur because the adjustment 

was not supported by historical experience or by the same quality of data 

provided for the other adjustments. While DOD believes it can incorporate 

the three recommendations into a new program within its proposed 
Page 4 GAO-03-367 Defense Transportation 

13 percent increase due to the conservative approach it took in developing 

this estimate, we believe that by quantifying the risk associated with this 

projection, DOD could provide the military services and Congress 

information needed to develop and review future budget requests for this 

program. The need for this type of information is further supported based 

on the long-standing problems associated with the current program and 

the large increase in costs contributing to the military services’ decision to 

terminate participation in one of the pilot programs. Further, without 

carefully monitoring costs during the implementation process and 

assessing costs and benefits from a period succeeding full implementation 

of the recommendations, DOD will not have the information needed to 

determine if anticipated improvements in the program are being achieved 

at a reasonable cost. Currently, DOD is beginning planning efforts to 

implement the recommendations. These efforts do not include monitoring 

and evaluating costs and benefits during the implementation phase and 

post implementation of the recommendations in a new program. 

We are recommending that DOD initiate actions that will implement the 

recommendations contained in its report to Congress within budget 

constraints, quantify the risk associated with achieving its cost estimates, 

monitor costs during the implementation phase to ensure that the 

proposed changes are being achieved within an acceptable and a 

predefined range, and assess the personal property program after the 

recommendations have been implemented to determine whether 

anticipated improvements are being achieved at a reasonable cost. 

In commenting on a draft of this report, DOD concurred with three of our 

four recommendations, including initiating actions to implement the 

recommendations contained in its report to Congress, monitoring costs 

during the implementation phase, and assessing the program after DOD’s 

recommendations have been implemented. DOD partially concurred with 

the remaining recommendation, i.e., to provide the military services and 

Congress with additional information to quantify the risk associated with 

achieving the projected 13 percent cost estimate. In its response, DOD 

stated that the 5 percent reduction that it made to the pilot programs’ 

average costs to adjust for economies of scale/program efficiencies was 

reasonable and very conservative. Further, DOD continues to believe that 

the program can be implemented within the 13 percent increase and noted 

that one of the military services validated this estimate. Therefore, DOD 

did not see the value added in providing the military services or Congress 

a formal risk assessment. We find that these statements still do not 

provide a basis for the 5 percent reduction and do not indicate the level of 

risk associated with implementing the recommendation within this 

estimate. We continue to believe that this information needs to be 
Page 5 GAO-03-367 Defense Transportation 

developed to help the military services prepare their budgets. The military 

services terminated participation in one of the pilot programs because 

actual costs were significantly greater than the projections provided to 

them for budgetary purposes. Providing a measure of risk for the 

13 percent projection could help prevent a repeat of what occurred during 

the pilot programs. Without this risk information, the military services will 

have to wait until after the moving industry submits bids to find out if 

DOD’s projection was reliable. 

DOD’s personal property program is managed centrally by the Military 

Traffic Management Command headquarters and administered locally by 

about 200 military service and DOD transportation offices around the 

world. The program relies on more than 1,200 domestic commercial 

carriers and 150 freight forwarders for international shipments to provide 

household goods transportation and storage services for military 

personnel and their families when they relocate. The military services pay 

shipment and storage-related costs from their military personnel accounts 

and loss and damage claims and personal property shipment office 

expenses through their operations and maintenance accounts. The 

program has remained virtually unchanged for nearly 40 years. It involves 

a complex process of qualifying carriers, soliciting rates, distributing 

moves, evaluating transportation providers’ performance, paying invoices, 

and settling claims. Among the program’s many challenges is ensuring that 

the moving industry provides adequate year-round capacity, especially 

during the summer peak-moving season when most service members, as 

well as the general public, schedule their moves. 

In prior reports, both DOD and GAO have identified problems related to 

the loss and damage claims process and the low quality of service from 

movers. In designing and implementing its evaluation plan, the 

Transportation Command also noted that weaknesses in the current 

program’s data management system precluded DOD from being able to 

track shipments in transit and from being able to extract reliable data on 

the number and types of shipments managed annually and their associated 

costs. 

In response to the long-standing problems, DOD has undertaken a number 

of pilot program studies to find ways to improve the process of shipping 

service members’ household goods. In August 1996, the Deputy Under 

Secretary of Defense (Logistics) tasked the Transportation Command with 

evaluating alternative approaches to the current program and 

recommending changes in the program based on the results of its 

evaluation. The Transportation Command identified three ongoing or 

Background 
Page 6 GAO-03-367 Defense Transportation 

planned pilot programs to include in its evaluation and began to collect 

data for its analysis from one of them in 2000. These three pilot programs 

shared some common features, such as testing performance-based service 

contracts and providing full replacement (rather than depreciated) value 

for loss or damage. Each one also had some distinctive features, such as 

allowing service members to participate in selecting their movers and 

contracting out installation personal property shipment office functions to 

private-sector move manager companies. 

The three pilot programs are summarized below. Further information on 

each program, as well as DOD’s current personal property program, is 

provided in appendix II. 

• The Military Traffic Management Command’s Reengineered Personal 

Property Program operated from the military services’ and the Coast 

Guard’s installations located in North Carolina, South Carolina, and 

Florida. It used military installation personal property shipment office 

personnel, as the current program does, and developed a new data 

management system that tracked both the movement of individual 

shipments and information on the number and cost of shipments. 

• The Department of Defense’s Full Service Moving Project operated 

from the military services’ and the Coast Guard’s installations located 

in the National Capital Region (the Washington, D.C., metropolitan 

area), Georgia, and North Dakota. It contracted the management of 

shipments to private-sector companies and offered optional relocation 

services, such as referrals for rental assistance and purchase and sale 

of real estate services, to personnel participating in the pilot program. 

• The Navy’s Service Member Arranged Move Pilot Program operated 

from Navy installations located in the states of California, Connecticut, 

Virginia, and Washington. It designated current staff within the 

installation personal property shipment offices as “move coordinators” 

to provide assistance, allowed participants to pre-select transportation 

providers, and paid for moves through government purchase cards. 

In June 2002, the Transportation Command submitted a report containing 

its evaluation results and proposed three recommendations to the Deputy 

Under Secretary of Defense (Logistics). After reviewing the results and 

receiving comments from the military services, DOD submitted its report, 

dated November 12, 2002, to Congress. DOD’s report contained the same 

three recommendations contained in the Transportation Command’s 

report. DOD also provided cost estimates for implementing the 

recommendations. The three recommendations were to 
Page 7 GAO-03-367 Defense Transportation 

• reengineer the liability/claims process by adopting commercial 

practices of minimum valuation, simplifying the filing of claims, and 

providing direct settlement with the carrier; 

• change the acquisition process to implement performance-based 

service contracts; and 

• implement information technology improvements, which could 

interface functions across such areas as personnel, transportation, 

financial, and claims. 

In its report to Congress, DOD estimated that reengineering the 

liability/claims process and changing the acquisition process to implement 

performance-based service contracts would increase the current 

program’s estimated $1.7 billion cost by 13 percent. Implementing the 

information technology improvements to enhance its data management 

capabilities and to provide training to users was estimated at an additional 

$4 million to $6 million. 

DOD also estimated that efforts to implement the changes to the current 

program would be completed by the first quarter of fiscal year 2005. DOD 

has developed a plan of action and milestones for designing the new 

personal property program. This initial effort identifies several teams, 

which are exploring the following issues: the acquisition/solicitation 

process, quality assurance, the liability/claims process, information 

systems technology, and electronic billing and payment. Four of these 

issues address the recommendations included in DOD’s November 2002 

report to Congress. The plan identifies a list of essential activities needed 

to carry out the responsibilities required to build the future personal 

property program. It also includes time lines and identifies a process to 

monitor problems and delays. However, it does not include monitoring 

costs and benefits during the implementation phase and the extent the 

proposed changes are being achieved within an acceptable and a 

predefined range. Further, it does not include evaluating the extent the 

benefits from the pilot programs will be achieved after the new program is 

implemented to determine whether the anticipated improvements were 

achieved at a reasonable cost. 
Page 8 GAO-03-367 Defense Transportation 

The three recommendations in DOD’s report to Congress offer solutions to 

several of the current program’s long-standing problems, such as the 

liability/claims process and the low quality of service. These problems 

have been identified in DOD and GAO’s prior reports, as well as in surveys 

conducted as part of the pilot program evaluation. The inability to monitor 

shipments and shipping information has been long recognized and was 

highlighted as an additional problem during DOD’s evaluation. If 

implemented, the first recommendation (i.e., reengineering the 

liability/claims process by adopting commercial practices of minimum 

valuation, simplifying the filing of claims, and providing direct settlement 

with the carrier) has the potential to help reduce the length of time it 

currently takes to resolve claims for lost, destroyed, or damaged 

household goods because the carrier recovery time would be eliminated 

for most moves, increase the reimbursement rates military personnel 

receive for their losses, and reduce DOD’s claims-related costs. The 

second recommendation (i.e., changing the acquisition process to 

implement performance-based service contracts) has the potential to help 

improve the generally low quality of service that DOD currently receives 

from the moving industry. The third recommendation (i.e., implementing 

information technology improvements, which could interface functions 

across areas such as personnel, transportation, financial, and claims) has 

the potential to improve the program’s ability to reliably monitor and 

collect data on the status and costs of shipments so that accurate 

reporting can be provided to DOD and Congress. 

As part of its evaluation, the Transportation Command cited that one of 

the long-standing problems with military household goods shipments is 

the liability/claims process, including the (1) length of time it takes to 

resolve claims, (2) low reimbursement rates, and (3) high cost of claims 

that DOD must pay. 

In a study conducted in 1999, the Military Traffic Management Command 

reported that 146 days are expended between the time a claim is filed by a 

service member to recovery of costs from the carrier by the government. 

During this period, military personnel file their claims for lost, destroyed, 

or damaged household goods with their respective military service’s 

claims offices and receive settlements (this occurs, on average, within 

DOD’s 

Recommendations 

Offer Solutions to 

Long-Standing 

Problems 

Reengineered 

Liability/Claims Process 

Has the Potential to 

Shorten Time, Increase 

Reimbursement Rates, and 

Reduce Claims-Related 

Costs to DOD 

Length of Time to Resolve 

Claims 
Page 9 GAO-03-367 Defense Transportation 

23 days), and then these offices file the claims against the carriers to 

recover the costs (this step is completed within the 146 day period).5

 In the 

Transportation Command’s pre-evaluation survey completed in 2000, 

responses from military personnel who had recently moved indicated that 

one of the lowest performance ratings involved the time required to settle 

a claim. 

Based on the Transportation Command’s evaluation of the claims process 

under the pilot programs, one of the results from implementing the pilot 

programs was the 146 day average required under the current program to 

settle claims and recover costs was reduced to an average of 30 days since 

the service member filed directly with the carrier and the military services 

did not have to recover costs. Under each pilot program, military 

personnel settled claims directly with the carriers. Service members who 

were not satisfied with offers made by the carriers could file their 

unresolved claims directly with DOD. Military services worked these 

claims with the carriers and if a claim was justified, the service member 

received just settlement under the pilot programs (i.e., if the items were 

lost or destroyed, the member received full replacement value, while 

damaged items were repaired). 

In its pre-evaluation survey, the Transportation Command found that 

military personnel cited low reimbursement amounts that typically do not 

cover the loss or damage of household goods as a major concern during 

their moves. Under the current program, a carrier’s liability is limited to 

$1.25 per pound multiplied by the shipment weight. Personnel receive only 

the depreciated value of lost, destroyed, or damaged items, up to a 

maximum of $40,000 per move.6

 When arranging their moves under the 

current program, military personnel can buy increased insurance coverage 

from their carrier, up to a full replacement value limit of $3.50 per pound 

times the shipment weight, at a cost of 85 cents per $100 of the stated 

value of the shipment. However, only military personnel making moves 

 5

 DOD reported that the 146 day recovery time is due to the fact that all current DOD 

contracts for shipment and storage of household goods give the carriers 120 days from 

receipt of the government’s demand to pay, deny, or make a final written offer on the

claims. While many claims are settled in less that 120 days, mailing time and negotiations to 

resolve disputes result in a slightly higher average settlement time. 

6

 For example, a 10,000-pound shipment would have a maximum carrier liability for loss 

and damage of $12,500. Service members can make shipments exceeding their weight 

allowance by paying the extra shipping and storage costs for the overage in weight. 

However, the government’s liability is limited to $40,000 per move regardless of the excess 

weight shipped and stored. 

Low Reimbursement Rates for 

Loss and Damage 
Page 10 GAO-03-367 Defense Transportation 

within the continental United States can buy this additional coverage; it is 

not available to those moving to or from overseas posts. Another option 

that military personnel have to increase their protection for loss and 

damage is to buy additional coverage from private-sector sources. 

Unlike the current program, the pilot programs provided full replacement 

value for lost and destroyed goods, with maximum amounts ranging from 

$63,000 to $75,000. Damaged items were repaired. Two of the three pilot 

programs reported that their cost per pound times the shipment weight 

rates were $3.50 for $63,000 maximum coverage and $6.00 for $75,000 

maximum coverage, respectively. The remaining pilot program did not 

give a cost per pound, stating only that its maximum coverage rate was 

$72,000. 

DOD has reported that, historically, approximately 35 percent of all moves 

result in loss or damage claims. A 1997 Military Traffic Management 

Command survey of 3,000 moves revealed that while 65 percent of 

shipments had loss or damage, only 35 percent resulted in claims being 

filed. DOD pays approximately $100 million a year in claims but recovers 

only 60 to 65 percent of the amounts paid to military personnel from the 

moving industry. These figures understate the actual loss and damage, 

since all military personnel do not file claims, apparently because the 

process takes a long time and reimbursement rates do not always cover 

the losses. DOD incurs these losses due to the structure of its current 

program. The military claims offices assist service members by arranging 

to pay their claims and then submitting the claims to the respective 

movers for reimbursement. As indicated above, DOD receives only partial 

reimbursement from the moving industry. 

If the recommendation is implemented, DOD expects to reduce a 

substantial portion of the estimated $100 million it currently pays in claims 

each year to service members and eliminate much of the 35 to 40 percent 

in losses it incurs from settling claims with the moving industry because

service members will be settling claims directly with their carriers. DOD 

also expects additional savings because fewer demands would be placed 

on military claims officials to manage the claims process. DOD believes 

that these savings will help offset the higher costs of providing full 

replacement value to service members for any loss and damage incurred 

during the shipment and storage of their personal property. 

High Costs to Government for 

Claims 
Page 11 GAO-03-367 Defense Transportation 

Our work has shown that another long-standing problem with the current 

personal property program is the poor quality of moving services provided 

to military personnel. The high number of loss and damage claims that 

military personnel file underscores this problem. According to the two 

pre-evaluation surveys cited in the Transportation Command’s evaluation, 

around 55 to 65 percent of respondents reported suffering some loss or 

damage of household goods during a recent move. Moreover, in the 

pre-evaluation survey conducted by the Transportation Command, the top 

four factors identified by service members as being of greatest importance 

to them in the moving process were the quality of packing, the care in 

handling personal property, the condition of their property upon receipt at 

the end of the move, and the receipt of fair payment for any losses or 

damages they suffered. In individual comments obtained during the 

pre-evaluation survey, the Transportation Command reported that some 

service members also cited the lack of professionalism and quality of 

customer service on behalf of moving crews as a concern. 

The problem stems primarily from the current program placing greater 

emphasis on costs (i.e., the lowest bids) than on the quality of service that 

carriers provide when moving shipments of military household goods. 

While the current program established its Total Quality Assurance 

Program to measure quality, data collected to develop scores for each 

carrier includes three measures (timeliness of pickup, timeliness of 

delivery, and reported loss and damage), which are not collected for all 

household goods shipments. The best indication of quality, customer 

satisfaction, is not measured in the current program. The problem of 

quality is further exacerbated by the program’s use of a 20 year-old tariff 

schedule that carriers use in developing their bids. This tariff contains 

lower rates than the current commercial tariff used during the pilot 

programs. 

Unlike the current program, the pilot programs screened carriers that 

wanted to participate in their programs by emphasizing the quality of 

carriers’ prior performance rather than the amount of their bids. For 

example, the Full Service Moving Project contracted a financial services 

company to conduct a financial and performance assessment of potential 

movers. The pilot program emphasized best value and placed more 

emphasis on performance (70 percent) than cost (30 percent) in 

determining which providers were awarded shipments. The pilot programs 

showed that these types of contracts could allow the government to 

pre-screen carriers for financial viability and, more importantly, to 

institute and maintain a quality assurance process to reduce losses and 

improve service. 

Change to PerformanceBased Service Contracts 

Could Improve Quality of 

Moving Services 
Page 12 GAO-03-367 Defense Transportation 

In addition to prescreening carriers for quality control purposes, the pilot 

programs also surveyed military personnel who participated in the 

programs and used the results to distribute future shipments to carriers 

that received the best performance scores. To address concerns about the 

obsolete tariff schedule, the pilot programs adopted current commercial 

tariffs for carriers to use in establishing their bids. 

The pilot programs also showed that the solicitation process could be 

streamlined by eliminating detailed statements of work and that the pilot 

programs could place responsibility for successful performance on 

carriers, allowing the government to focus on outcomes, rather than 

processes. Finally, the pilot programs demonstrated that using these types 

of performance-based service contracts did not have an adverse effect on 

small business participation, a major concern of the moving industry. On 

the basis of the total dollar value of shipments, each pilot program 

exceeded the Small Business Administration’s goal of 23 percent 

participation for the industry. Specifically, 48 percent of the Military 

Traffic Management Command’s Reengineered Personal Property 

Program’s revenues, 74 percent of the Full Service Moving Project’s 

revenues, and 100 percent of the Navy’s Service Member Arranged Move’s 

revenues went to small businesses. 

Another ongoing problem with the current personal property program is 

its inability to provide reliable data on the status of in-transit shipments or 

on the number and associated costs of shipments managed by DOD each 

year. Because of the lack of reliable data on shipments and costs, program 

managers have no way of knowing the actual costs of moving military 

personnel’s household goods. In addition, they have no access to real-time 

tracking data that they could use to manage transportation and storage 

costs and to help cut down on the need for temporary storage by reducing 

the number of failed deliveries. 

Two of the pilot programs included features to address the problems 

associated with the current program’s stand-alone data management 

system. The pilot programs each developed a Web-based data management 

system to enhance the visibility of individual shipments and provide more 

reliable data on shipments and costs. For example, the Military Traffic 

Management Command’s Reengineered Personal Property Program’s data 

management system provided in-transit visibility. This made it possible to 

track the status of individual shipments and gave real-time access to those 

sections of the shipment records that various parties involved in the 

relocation process needed for data entry or status review. The pilot 

program’s data management system provided a complete picture of the 

Implementing Information 

Technology Improvements 

to Address Data Reliability 

Problems 
Page 13 GAO-03-367 Defense Transportation 

service member’s move from start (the move application process) to finish 

(the claims submission and resolution process). In addition, the data 

management system demonstrated the potential to provide information to 

personnel in various functional areas involved in the service members’ 

relocation process (such as personnel, transportation, financial, and 

claims). Finally, the data management system demonstrated the potential 

to provide data for planning and budgeting purposes on the types of 

shipments made annually across DOD and their costs. The Full Service 

Moving Project’s data management system was developed but not fully 

implemented because the military services terminated their participation 

in the pilot program due to its high costs. While the Navy’s pilot program 

developed a database near the end of the Transportation Command’s 

evaluation, the database was not fully implemented nor assessed as part of 

the evaluation. 

Our analysis indicated that DOD’s three recommendations are supported 

by the results of the Transportation Command’s evaluation of the three 

pilot programs. The Transportation Command adopted a sound 

methodology to conduct its evaluation, and it adjusted this methodology 

when circumstances warranted. The results of the Transportation 

Command’s evaluation are based on data collected from a limited number 

of geographical areas. While the shipments included in the evaluation do 

not represent all shipment types managed annually by DOD, we believe 

that the evaluation results provide sufficient information to allow DOD to 

initiate actions to improve its current personal property program within 

budget constraints. 

We found that the Transportation Command used a methodologically 

sound approach to evaluate the results of the three pilot programs and 

make its recommendations. Before it started the evaluation process, the 

Transportation Command considered some lessons learned that had 

emerged from our review of the Hunter Pilot Program in 1999,7

 and it 

followed through with several of them. For example, it obtained assistance 

from a contractor to design an evaluation plan that met professional 

standards. The Transportation Command identified four aspects, or 

factors, of the property program that served as the focus of its evaluation 

(i.e., quality of life, total costs, small business participation, and process 

 7

 U.S. General Accounting Office, Defense Transportation: The Army’s Hunter Pilot 

Project Is Inconclusive but Provides Lessons Learned, GAO/NSIAD-99-129 (Washington, 

D.C.: June 23, 1999). 

Transportation 

Command’s 

Evaluation of Pilot 

Programs Supports 

DOD’s Three 

Recommendations 

Transportation Command 

Implemented a 

Methodologically Sound 

Evaluation 
Page 14 GAO-03-367 Defense Transportation 

improvements). The evaluation plan also prescribed that only one quality 

of life survey be administered to each participating service member in 

order to avoid survey “fatigue” that can result from subjecting a person to 

multiple surveys, and thus avoid the resulting potential for questionable 

results. In designing the evaluation plan, the Transportation Command 

incorporated a number of important evaluation features. These features 

included assessing the four factors consistently across all three pilot 

programs, ensuring that the evaluation received data from the pilot 

programs during the same time period to avoid the need to make 

adjustments due to potential changes in carrier operations and costs, 

conducting a survey of service members using the current program to 

establish a baseline from which to measure the pilot program results, and 

developing a method to provide estimates of what DOD would have paid 

for comparable shipments under the current program for those shipments 

completed under the pilot programs. 

The Transportation Command made appropriate adjustments to the 

evaluation plan when it learned that the three pilot programs would not be 

underway at the same time and that they would not provide all of the 

information originally outlined in the plan. For example, the Full Service 

Moving Project began later and terminated earlier than was expected, the 

Navy’s Service Member Arranged Move Pilot Program failed to conduct a 

quality of life survey and collect cost data as outlined in the evaluation 

plan, and none of the three pilot programs provided costs associated with 

individual process improvements. The Transportation Command included 

qualitative analytical techniques so that it could include as much 

information on each pilot program as possible in its evaluation while also 

dealing appropriately with data limitations. The Transportation Command 

also shifted the evaluation focus from the individual pilot programs to 

specific features from the three programs, such as full replacement value 

for loss and damage and the screening process for carrier participation. 

Our work indicated that the Transportation Command’s analysis of data 

collected from the three pilot programs supports the three 

recommendations that DOD included in its report to Congress. The 

Transportation Command’s analysis of household goods shipment data 

from the pilot programs showed that the average amount of time that 

service members and DOD spend to settle claims and recover costs from 

carriers fell dramatically in all three pilot programs. In comparison with 

the current program’s 146-day average, it took only 30 days, on average, to 

settle a claim under the Reengineered Personal Property Program and the 

Full Service Moving Project and fewer than 14 days under the Navy’s 

program. Survey results indicated that full replacement (rather than 

Survey and Analytical Data 

Support Command’s 

Recommendations 
Page 15 GAO-03-367 Defense Transportation 

depreciated) value, direct claims settlements, and anticipated 

improvements in the claims process accounted for the highest increases in 

satisfaction. Based on experiences during the pilot programs, DOD 

believes that direct claims settlement between service members and 

carriers should reduce claims costs DOD currently incurs. Under the 

current program, DOD must collect from the carriers after it has paid the 

service members’ claims. DOD expects that this step will be eliminated in 

most instances because it is anticipated that service members will be 

resolving most of their claims directly with their carriers. 

The Transportation Command’s analysis of process improvement data, 

interviews and observations during site visits, and survey results from the 

pilot programs supported DOD’s recommendation to use performancebased service contracts to improve the quality of services that the moving 

industry provides to the military. The process of prescreening carriers 

desiring to participate in the pilot programs on the basis of their financial 

viability and past performance helped to eliminate poor performers. 

Furthermore, the pilot programs’ use of post-move surveys allowed them 

to get immediate and continuous feedback on the carriers’ performance 

and to use this information to distribute future work to those carriers with 

the highest performance ratings and best value. In addition, two of the 

pilot programs reduced the amount of paperwork associated with 

soliciting proposals and approving carriers. 

Finally, the Transportation Command’s review and observations of two of 

the pilot programs’ Web-based data management systems supported 

DOD’s recommendation to overhaul the current personal property 

program’s computer system (the Transportation Operational Personal 

Property Standard System). The Transportation Command found that the 

Reengineered Personal Property Program’s data management system 

significantly improved communications between the various DOD offices 

and the moving industry. The system gave real-time access to shipment 

records to DOD’s personal property shipment offices, certifying officers, 

prepayment auditors, military service headquarters, and military service 

claims offices and finance centers, as well as moving industry participants. 

Similar results occurred with the Full Service Moving Project’s Best Value 

Distribution Database system, but the military services terminated their 

participation in this pilot program before the system’s full potential could 

be demonstrated. 

While the shipments included in the evaluation do not represent all the 

shipment types managed annually by DOD, we believe that the evaluation 

results provide sufficient information to allow DOD to initiate actions to 

improve its current personal property program. 
Page 16 GAO-03-367 Defense Transportation 

Our review found that the estimates DOD reported to Congress might

understate the total initial cost for implementing the information 

technology improvements recommendation and contain a questionable 

adjustment for costs associated with the claims and contracting process 

recommendations. Also, DOD did not quantify the risk associated with 

implementing these latter recommendations within its projected 

13 percent increase over the current program’s cost. Therefore, the ability 

to implement changes to the existing program within the cost estimates 

reported to Congress is uncertain. 

Based on our discussions with Military Traffic Management Command 

officials and review of available documents, we concluded that the total 

initial cost to implement the information technology improvements

recommendation will more likely be $7 million rather than the $4 million 

to $6 million estimate that DOD previously reported to Congress. In its 

response to a draft of this report, DOD maintained that the costs to 

implement a new Web-based data management system would fall within 

its initial cost estimate of $4 million to $6 million. DOD’s projected cost 

estimate includes $5 million for development and implementation of the 

new system and $500,000 each for user training and system verification 

and validation testing. At a minimum, based on these projected cost 

estimates, the initial cost to implement the information technology 

improvements recommendation would more likely be $6 million. 

While we concur with the premise of two of the three adjustments used to 

develop the 13 percent cost increase to implement the remaining 

recommendations, we are less assured in the extent to which the projected 

savings related to the third adjustment may occur. We found that the first 

two adjustments were based on historical data. However, we question the 

rationale DOD used to develop the third adjustment, as the savings 

associated with this adjustment are based on assumed cost reductions 

resulting from changes in program operations. Also, these reductions lack 

the same quality of evidentiary support as DOD provided for the other two 

adjustments. 

DOD believes it took a conservative approach in developing the savings in 

each of the three adjustments; therefore, it assumes that the proposed 

changes to claims and the contracting process can be achieved within the 

13 percent increase over the current program’s costs. Due to the longstanding problems with this program and the high pilot program costs that

contributed to the military services’ early termination of participating in 

one of the pilot programs, we believe that by quantifying the risk 

associated with this projection, DOD could provide the military services 

and Congress information needed to develop and review future budget 

Ability to Implement 

New Program within 

Cost Estimates 

Reported to Congress 

Is Uncertain 
Page 17 GAO-03-367 Defense Transportation 

requests for this program. Further, without carefully monitoring costs 

during the implementation process and assessing costs and benefits from a 

period succeeding full implementation of the recommendations, DOD will 

not have the information needed to determine if anticipated improvements 

in the program are being achieved at a reasonable cost. Currently, DOD is 

beginning planning efforts to implement the recommendations. These 

efforts do not include monitoring and evaluating costs and benefits during 

the implementation phase and post implementation of the 

recommendations in a new program. 

The information DOD has provided on costs to implement the information 

technology improvements recommendation varies. Information provided 

during our review indicated that the total initial cost to improve the 

current data management system would be higher than the $4 million to 

$6 million DOD included in its report to Congress. DOD worked with the 

contractor who developed the Reengineered Personal Property Program’s 

Web-based data management system to develop an estimate of the cost to 

expand the capabilities tested during the pilot program. Also included in 

this estimate were funds to provide training for users of the new system. 

Based on our discussions with officials from the Military Traffic 

Management Command and our review of available documents, we 

concluded that these costs would more likely be $6 million, as the data 

management system development cost was projected to be $5 million with 

an additional $1 million for user training. The need for this training as part 

of a new personal property program was identified during DOD’s 

evaluation of the pilot programs. We increased our overall projections for 

the cost of the new system to $7 million when we learned that DOD 

planned to continue spending at least another $1 million annually for 

independent verification and validation testing and contractor support. 

This latter expense was identified to us during discussions following 

DOD’s submission of its report to Congress. 

In its response to a draft of this report, DOD maintained that the costs to 

implement a new Web-based data management system would fall within 

its initial cost estimate of $4 million to $6 million. It projected a cost of 

$5 million for system development and implementation and $500,000 each 

for user training and initial system validation. At a minimum, based on 

these projected cost estimates, the initial cost to implement the 

information technology improvements recommendation would more likely 

be $6 million. Because we did not assess the sufficiency of DOD’s original 

estimates of $1 million each for training and validation testing, we are 

unable to assess the impact of the reduction on the improvements in 

information technology across DOD. 

Costs to Implement 

Information Technology 

Improvements Vary 
Page 18 GAO-03-367 Defense Transportation 

Based on our discussion with DOD officials, we learned that the plan is to 

implement this recommendation regardless of the status of the other two 

recommendations because managers and users of the program need more 

reliable information to manage the program’s shipments and their costs. 

Funds to implement this recommendation would come from the military 

services’ operations and maintenance accounts. 

The soundness of the three adjustments the Military Traffic Management 

Command used to develop its estimated 13 percent increase over the 

current program costs to implement the remaining recommendations—the 

claims process and performance-based service contracts—varies. We 

found that two of these adjustments are based on reasonable assumptions 

and are supported by historical experience and by data. The savings 

associated with the third adjustment are based on assumed cost 

reductions resulting from changes in program operations and lack the 

same quality of evidentiary support as DOD provided for the other two 

adjustments. Therefore, we are less assured in the extent to which the 

savings associated with this adjustment may occur. Finally, we found that 

in its report to Congress, DOD did not quantify the risk of achieving these 

recommendations within the projected 13 percent increase. This 

information is important to the military services as they develop their 

military personnel and operations and maintenance budget requests and to 

Congress as it assesses the reasonableness of these requests. 

In developing the 13 percent estimate, the Military Traffic Management 

Command determined that three adjustments to the average costs for the 

pilot programs were required to develop the cost for the full rollout of a 

new personal property program. The first two adjustments (i.e., reducing 

the average weight of shipments and reducing costs to adjust for a mix of 

small and large businesses) were made to offset differences between the 

pilot programs’ shipments and those more typically managed across DOD. 

The third adjustment was made to reduce the pilot programs’ costs to 

reflect anticipated savings based on economies of scale.8

 In developing 

these adjustments, the Military Traffic Management Command worked 

with a contractor and consulted with officials from the military services 

and moving industry associations. 

 8

 In later discussions, department officials stated that “economies of scale” should be 

changed to “program efficiencies” to reflect a more efficient program with timely and 

accurate management data; member counseling; and reduced loss, storage, and indirect 

costs. 

Soundness of Estimates to 

Develop Cost for Changing 

Claims and Contracting 

Processes Varies 

Estimate Includes a 

Questionable Cost Adjustment 
Page 19 GAO-03-367 Defense Transportation 

While we believe that the shipment weight and small business mix 

adjustments are reasonable, we question the extent to which the 

economies of scale or program efficiencies adjustment may be achieved. 

For the weight adjustment, the Military Traffic Management Command 

determined that the average weights of moves in the two pilot program 

areas were higher than those experienced in typical departmentwide 

moves. As a result, the Military Traffic Management Command reduced the 

pilot programs’ average weights to reflect the lower, more typical weights 

to be used in calculating a total cost for a departmentwide program. This 

adjustment resulted in a 12 percent drop in average costs. We found the 

approach of using historical data to more accurately reflect the typical 

shipment weights to be reasonable. 

Next, the Military Traffic Management Command further lowered the pilot 

programs’ average costs because the pilot programs had higher small 

business participation rates than the departmentwide average, and small 

businesses are typically more expensive than large businesses. Small 

businesses accounted for 48 percent of the cost of all moves under the 

Reengineered Personal Property Program and 73 percent under the Full 

Service Moving Project. In addition, small businesses were 14 percent 

more expensive per shipment in the Reengineered Personal Property 

Program and 74 percent more expensive in the Full Service Moving Project 

than what each pilot program paid to large businesses. In developing its 

departmentwide estimate, the Military Traffic Management Command 

used a small business participation target rate of 30 percent. This 

30 percent target rate is higher than the Small Business Administration’s 

23 percent goal for government agencies conducting business with this 

industry. On the basis of this lower participation rate, the Military Traffic 

Management Command reduced the pilot programs’ average costs further 

by 8 percent. We agree that this adjustment in costs based on differences 

in the pilot programs’ small business participation rate and the new 

30 percent goal is a reasonable way to reflect the differences between the 

pilot programs’ costs and the departmentwide-projected costs. 

We found that the third adjustment that the Military Traffic Management 

Command made—to reduce the cost of departmentwide shipments 

because of economies of scale or program efficiencies—was not 

adequately supported based on either historical experience or data that 

DOD later provided. The Military Traffic Management Command reduced 

the pilot programs’ average costs by 5 percent on the assumption that 

• the pilot programs’ shipments involved only a limited number of 

providers; 
Page 20 GAO-03-367 Defense Transportation 

• the pilot programs only included a limited number of shipments while 

the current program manages over 600,000 shipments annually; 

• more accurate and timely management data that includes service 

member counseling, reduced losses, and storage and indirect costs will 

result in a more efficient program; and 

• overhead and operating costs will be spread due to a larger volume of 

shipments. 

While recognizing that some changes may result from these anticipated 

program efficiencies, the effect of these changes on potential cost savings 

is uncertain at this time. The Military Traffic Management Command did 

not provide the same level of evidentiary support that it provided on the 

other two adjustments. Further, we believe that only time will determine if 

DOD’s assumption for this adjustment, in particular, proves to be correct. 

We found that DOD has not provided a level of assurance to the military 

services and Congress that its projected 13 percent increase over the 

current program’s cost can be achieved. Quantifying the risk associated 

with this projection could provide the military services assurance of the 

viability of the projected 13 percent increase as they prepare budgets to 

support the increased cost for this program. Congress could also use this 

information as it reviews DOD’s requests for additional funds to 

implement changes in this program. The need for this type of information 

is further supported based on the long-standing problems associated with 

the current program and the fact that shipment and storage costs under 

the pilot programs were significantly higher than those that DOD 

estimated it would have paid under its current program in the same 

geographical areas. These costs ranged from 31 to 32 percent higher under 

the Reengineered Personal Property Program and from 51 to 54 percent 

higher under the Full Service Moving Project.9

 These higher-thananticipated costs contributed to the military services’ decision to 

terminate their participation in the Full Service Moving Project before its 

test period ended. 

While DOD did not quantify the risk, per se, it believes a conservative 

approach was taken in developing the savings in each of the three 

adjustments. As a result, DOD assumes that the proposed changes to the 

claims and contracting processes can be achieved with its projected 

 9

 We believe that the methodology and data used to develop these cost estimates are sound. 

DOD Did Not Quantify the Risk 

for Its Cost Estimate 
Page 21 GAO-03-367 Defense Transportation 

increase of 13 percent over the current program’s budget. We still believe 

that the Military Traffic Management Command could have quantified the 

risk and provided this additional information to the military services and 

Congress as additional assurance of the likelihood of implementing the 

two recommendations within its projected 13 percent increase. The need 

for this information is further supported based on the long-standing 

problems DOD has experienced in this program, the fact that the military 

services terminated participation in one of the pilot programs due to the 

high cost increases, and the need to determine whether the proposed 

additional funds from military personnel and operations and maintenance 

accounts will be sufficient to implement the recommendations. 

In addition to the information that could be gained from quantifying the 

risk of its cost projection, we believe that only by careful monitoring 

during the implementation phase will DOD be able to ensure that the 

proposed changes are being achieved within an acceptable and a 

predefined range. Further, while we believe that the evaluation results 

support implementing plans to enhance the current program, it should be 

noted that the pilot programs’ shipments included in the evaluation were 

not typical of all types of shipments managed annually. Therefore, DOD 

was precluded from projecting the extent to which the recommended 

improvements can be achieved DOD-wide. Unless a subsequent evaluation 

is undertaken after the recommendations have been implemented, DOD 

will not be able to assess the extent to which the projected benefits are 

being achieved for military personnel, their families, and DOD, and 

whether the benefits are being achieved at a reasonable cost. Selecting an 

evaluation period to include the peak-moving season would also provide 

DOD with the information its needs to determine if the proposed changes 

can be achieved during the summer, when the demand for moving services 

by DOD and the private sector is at its highest. 

The three recommendations DOD developed from its evaluation of the 

current and pilot programs, if implemented successfully, could enhance 

the quality of life for relocating service members and their families; reduce 

claims-related costs to DOD; and resolve problems related to the reliability 

of management information on the status of shipments and on the 

quantity, types, and costs of shipments that DOD and the military services 

manage annually. Delaying implementation of the recommendations only 

prolongs problems military personnel, their families, and DOD experience 

under the current program. 

DOD has not quantified the risk associated with achieving its projected 

13 percent increase over the current program’s costs to implement the 

Conclusions 
Page 22 GAO-03-367 Defense Transportation 

claims process and performance-based service contract recommendations. 

Without quantifying the risk, the military services and Congress cannot be 

assured that these recommendations can be achieved within this estimate 

or whether additional funding or trade-offs may be needed. Further, 

without careful monitoring during the implementation phase, DOD will not 

be able to ensure that the proposed changes are being achieved within an 

acceptable and a predefined range. 

Because the pilot programs’ shipments included in the evaluation were not 

typical of all types of shipments managed annually, it was not possible for 

DOD to project the extent to which the recommended improvements can 

be achieved departmentwide. Without evaluating the program following 

implementation of the recommendations, DOD will be unable to assess the 

extent to which the projected benefits for military personnel, their 

families, and DOD are being achieved and, if so, whether they are being 

achieved within a reasonable cost. Also, if DOD does not select an 

evaluation period that includes the peak-moving season, it will not have 

the information needed to determine if the proposed changes can be 

achieved in the summer, when the demand for moving services is at its 

highest. 

To improve the personal property program for military personnel, their 

families, and program administrators, we recommend that the Secretary of 

Defense direct the Commander, U.S. Transportation Command, to 

• initiate actions to implement the three recommendations contained in 

DOD’s report to Congress within budget constraints, 

• provide the military services and Congress additional information to 

quantify the risk associated with achieving the projected 13 percent 

cost estimate before the claims process and performance-based service 

contracts recommendations are implemented to provide the military 

services with information needed for budgeting purposes, 

• monitor costs for all recommendations during the implementation 

phase to ensure that the proposed changes are being achieved within 

an acceptable and a predefined range, and 

• assess the effects of the three recommendations on the personal 

property program (to be carried out after the summertime peak-moving 

season once the recommendations have been implemented) to 

determine whether the anticipated improvements in the program are 

being achieved at a reasonable cost. 

Recommendations for 

Executive Action 
Page 23 GAO-03-367 Defense Transportation 

In commenting on a draft of this report, DOD concurred with three of our 

four recommendations. For the first of these recommendations, DOD 

stated that it is developing a plan to implement those recommendations it 

reported to Congress and anticipates its recommendations will be 

implemented by the end of the first quarter of fiscal year 2006, assuming 

the military services receive the additional funds needed to fund program 

enhancements. In response to our recommendation to monitor costs 

during the implementation phase, DOD stated that rolling out the new 

program will require monitoring of costs to determine if the moving 

industry partners are submitting bids that will allow DOD to enhance this 

program within the projected 13 percent cost increase. Further, DOD plans 

to include a process to conduct a rate reasonableness analysis upon 

receipt of the rates. For rates found to be outside the range of 

reasonableness, carriers will be given one opportunity to resubmit their 

rates. DOD plans to only use those rates determined to be reasonable in 

the new program. DOD also plans to include metrics, target/benchmark 

performance indicators, and a methodology for data collection in an 

updated program of action and milestone plan. For our recommendation, 

i.e., assess the effects of the three DOD recommendations on the personal 

property program to determine whether the anticipated improvements in 

the program are being achieved at a reasonable cost, DOD plans to collect 

data needed to determine if anticipated improvements have been achieved 

on a continuing basis. DOD plans to use customer satisfaction surveys in 

developing carrier performance ratings, which will be established 

quarterly, with the exception of the peak season, when performance 

ratings will be established monthly. If properly implemented, we believe 

the proposed DOD actions will sufficiently address these 

recommendations. 

DOD partially concurred with the remaining recommendation, i.e., provide 

the military services and Congress with additional information to quantify 

the risk associated with achieving the projected 13 percent cost estimate 

to provide the military services with information needed for budgeting 

purposes. DOD continues to believe that the 5 percent reduction it made 

to pilot programs’ average costs to adjust for economies of scale/program 

efficiencies was reasonable and very conservative and that the program 

can be implemented within the projected 13 percent increase over current 

program costs. DOD also reported that one of the military services 

validated the 13 percent cost increase following our audit. Further, DOD 

stated that it did not see value added in providing the military services or 

Congress a formal risk assessment but will continue to work with the 

military services as execution progresses to make sure they have all 

information required for budget purposes. Additionally, while not part of 

this recommendation, DOD also said it did not concur with our finding 

Agency Comments 

and Our Evaluation 
Page 24 GAO-03-367 Defense Transportation 

that the cost estimate for implementing its information technology 

improvements recommendation would be $7 million. 

In reviewing the response, we found that DOD still did not provide any 

data to support its assumption of a 5 percent cost savings from economies 

of scale/program efficiencies. DOD stated that the new program will be 

about 200 times larger than the pilot programs and that the resulting 

increase in volume will lower the cost per unit, a standard and accepted 

law of economics. While we agree that the cost may decrease, it may also 

increase or remain unchanged. Moreover, the cost may decrease by less 

than 5 percent. Without specific data showing the per move costs will 

decrease as the scale of operations increase, we continue to question the 

basis for DOD’s assumption of a 5 percent reduction. 

We believe that the validation effort completed by one of the military 

services, along with the calculations and assumptions DOD used in 

developing the 13 percent cost estimate, does not provide the military 

services and Congress with information needed to reliably develop and 

review budget requests to fund enhancements to the current program. We 

continue to believe that DOD needs to qualify this estimate with a measure 

of the risk associated with implementing its recommendations. Without 

providing the range of possible cost increases and the risk regarding the 

likelihood of achieving this 13 percent projection within that range, DOD 

may encounter a repetition of its experience with one of the pilot 

programs, which had to be terminated because actual costs exceeded 

projected costs. Absent this risk information, the military services will 

have to wait until after the transportation providers submit their bids in 

order to learn whether the recommendations can be implemented within 

the 13 percent projection. Should the bids result in costs that exceed this 

estimate, DOD and the military services will need to make adjustments to 

ensure that the recommendations are implemented within funding limits. 

Therefore, we continue to believe that our recommendation has merit. 

Our finding that the implementation of the information technology 

improvements recommendation would likely cost $7 million rather than 

the $4 million to $6 million that DOD projected was based on information 

we received from DOD during the audit. Specifically, we calculated that 

the costs to develop and implement the new system would be about 

$5 million and that training for users of the enhanced system would cost 

an additional $1 million. DOD had identified the need for this training 

during its evaluation of the pilot programs. After DOD submitted its report 

to Congress, it identified another potential cost—an additional $1 million 

for independent verification and validation testing of the system. Our 

$7 million estimated included all three of these cost elements. In its 
Page 25 GAO-03-367 Defense Transportation 

response to a draft of this report, DOD maintained that its costs estimate 

would fall within its initial cost estimate of $4 million to $6 million, 

including $5 million for system development and implementation and an 

additional $500,000 each for user training and system verification and 

validation testing. At a minimum, based on these projected cost estimates, 

the initial cost to implement the information technology improvements 

recommendation would more likely be $6 million. However, since we did 

not originally assess the sufficiency of the $1 million estimates for training 

and testing, we are unable to assess what impact DOD’s reduction for 

these costs to $500,000 would have on the implementation of the system 

across DOD. We have reflected DOD’s changes in the body of our report. 

DOD’s comments are reprinted in appendix III. DOD also provided 

technical comments, and we revised our report to reflect them where 

appropriate. 

We performed our review from April 2002 through February 2003 in 

accordance with generally accepted government auditing standards. 

Appendix I contains the scope and methodology for this report. DOD’s 

comments are reprinted in their entirety in appendix III. 

We are sending copies of this report to the appropriate congressional 

committees; the Secretary of Defense; the Commander, U.S. 

Transportation Command; and the Director, Office of Management and 

Budget. We will also make copies available to others upon request. In 

addition, the report will be made available at no charge on the GAO Web 

site at http://www.gao.gov. 
Page 26 GAO-03-367 Defense Transportation 

Please contact me at (202) 512-8365 or Lawson Gist, Jr., at (202) 512-4478 

if you or your staff have any questions concerning this report. Key 

contributors to this assignment were Robert L. Self, Jacqueline S. McColl, 

Arthur L. James, Jr., Charles W. Perdue, and Nancy L. Benco. 

William M. Solis 

Director 

Defense Capabilities and Management 
Page 27 GAO-03-367 Defense Transportation 

List of Congressional Committees 

The Honorable John Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Ted Stevens 

Chairman 

The Honorable Daniel K. Inouye 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

The Honorable Joel Hefley 

Chairman 

The Honorable Solomon P. Ortiz 

Ranking Minority Member 

Subcommittee on Readiness 

Committee on Armed Services 

House of Representatives 

The Honorable Jerry Lewis 

Chairman 

The Honorable John P. Murtha 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 
Appendix I: Scope and Methodology 

Page 28 GAO-03-367 Defense Transportation 

To assess the extent to which the recommendations in the Department of 

Defense’s (DOD) November 2002 report to Congress addressed major 

problems in the personal property program, we took the following steps: 

• To identify the major problems facing the current personal property 

program, we reviewed DOD and GAO reports addressing this program. 

These reports identified problems associated with quality of service 

and claims. We also conducted interviews with personal property 

program officials and their contractors to gain an understanding of the 

current data management system’s limitations and the long-standing 

problems involving the lack of reliable information on shipments and 

their costs. 

• To determine whether the proposed recommendations in DOD’s report 

to Congress addressed the major problems of the current program, we 

tracked the recommendations back to the U.S. Transportation 

Command’s report on its evaluation results and assessed the extent to 

which the recommendations are linked to and have the potential to 

address problems. 

To assess whether the recommendations in DOD’s report to Congress 

were supported by DOD’s evaluation findings and should be implemented, 

we took the following steps: 

• To determine if the Transportation Command developed a 

methodologically sound evaluation plan, we assessed the command’s 

efforts against the findings and recommendations contained in our 

report1

 on the Army’s Hunter Pilot Program results and against 

professional standards2

 we would use if conducting a comparable 

evaluation. These sources addressed issues such as (1) seeking advice 

in designing a methodologically sound evaluation plan, (2) developing 

the evaluation plan prior to testing, (3) identifying factors to be 

assessed and the data required for analyses to develop findings and 

recommendations, (4) limiting quality of life surveys to only one for 

each participant to preclude survey “fatigue,” and (5) conducting 

simultaneous testing of the pilot and current programs. 

 1 GAO/NSIAD-99-129. 

2

 U.S. General Accounting Office, Developing and Using Questionnaires, GAO/PEMD10.1.7 (Washington, D.C.: Oct. 1993) and U.S. General Accounting Office, Using Structured 

Interviewing Techniques, GAO/PEMD-10.1.5 (Washington, D.C.: June 1991). 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 29 GAO-03-367 Defense Transportation 

• To determine if the Transportation Command implemented an effective 

evaluation strategy during the data collection phase of its evaluation, 

we reviewed the pilot programs’ efforts to collect data for the four 

factors as prescribed in the Transportation Command’s evaluation 

plan. We also assessed the adjustments the Transportation Command 

made in its evaluation strategy to address issues that could affect the 

soundness of the results. An example of the issues addressed included 

developing a constructed cost methodology to provide better estimates 

of what DOD would have paid under the current program for 

shipments made by the pilot programs. 

• To assess the Transportation Command’s development of findings and 

recommendations to improve the current personal property program, 

we reviewed the evaluation techniques (quantitative and qualitative 

analyses) used to analyze data collected for the four factors. Further, 

we assessed the extent to which the Transportation Command adjusted 

the evaluation techniques to make up for differences in the way that 

the pilot programs provided data for the evaluation. 

To assess the methodology that DOD used to develop cost estimates for 

implementing the recommendations, we took the following steps: 

• To determine the reliability of the cost estimates for the pilot programs 

and for the proposed recommendations, we reviewed the cost 

projection methodologies used by the Transportation Command and by 

the Military Traffic Management Command. 

• To determine the reliability of pilot program shipment-related costs 

used in the report, we reviewed the data collection efforts used by each 

pilot program for the transportation and storage of household goods 

included in the Transportation Command’s evaluation. Further, we 

reviewed the constructed cost methodology used to develop the 

estimates of what DOD would have paid to make comparable 

shipments under the current program in the pilot programs’ test areas. 

• To determine the reasonableness of the assumptions and sources of 

data used to develop cost estimates for implementing 

recommendations for the personal property program, we met with 

officials from the Military Traffic Management Command and their 

contractor to discuss the methodology. We also reviewed the contents 

of their briefing on the cost estimate work for implementing changes to 

the claims process and performance-based service contracts and 
Appendix I: Scope and Methodology 

Page 30 GAO-03-367 Defense Transportation 

additional information the Military Traffic Management Command 

provided on the costs to implement information technology 

improvements. 

We did not make an assessment of whether the anticipated benefits to be 

derived from implementing the three recommendations would warrant the 

additional costs DOD projects will be required to fund these 

improvements. Furthermore, we did not independently test the reliability 

of data DOD extracted from its data system to develop costs. We found 

that the department placed proper caveats on their use of such data, and 

in the case of comparing pilot programs’ shipment costs to current 

program costs, developed a constructed cost methodology to address 

current program data management system weaknesses. 

During this and prior3

 reviews of DOD’s evaluation efforts, we met with 

officials and obtained documents from the Office of the Assistant Deputy 

Under Secretary of Defense (Transportation Policy), Washington, D.C.; the 

U.S. Transportation Command, Scott Air Force Base, Illinois; the Military 

Traffic Management Command, Alexandria, Virginia; the Department of 

Defense Inspector General, Full Service Moving Project, and Hay Group 

(Transportation Command Contractor), Arlington, Virginia; American 

Management Systems (Transportation Command contractor), 

PricewaterhouseCoopers (Military Traffic Management Command 

contractor), and Systems Research and Applications (Military Traffic 

Management Command contractor), Fairfax, Virginia; Logistics 

Management Institute (Military Traffic Management Command 

contractor), McLean, Virginia; the Navy’s Service Member Arranged Move 

Pilot Program, Mechanicsburg, Pennsylvania; The Gallup Organization 

(Full Service Moving Project contractor), Omaha and Lincoln, Nebraska; 

and Parsifal Corporation (Military Management Traffic Command 

contractor), Palm Bay, Florida. In addition to these agency meetings and 

documents, we drew upon information contained in a testimony 

 3

 Our prior reviews focused on the department’s efforts (1) to develop a methodologically 

sound evaluation plan and (2) to collect data according to the plan for future analysis and 

development of recommendations for an improved departmentwide program. 
Appendix I: Scope and Methodology 

Page 31 GAO-03-367 Defense Transportation 

statement, in reports, and in status briefings resulting from our prior 

reviews of this program. 

Our work for this review was performed from April 2002 through February 

2003 in accordance with generally accepted government auditing 

standards. 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 32 GAO-03-367 Defense Transportation 

The Transportation Command evaluated three pilot programs to assess 

alternative approaches that might address long-standing problems with its 

current personal property program. The following tables provide features 

of the current program and the three pilot programs. As the tables show, 

the pilot programs had several features that provided enhancements to 

military personnel and their families and to DOD that are not offered by 

the current program. 

Table 1 compares claims-related features. Specifically, the pilot programs

provided full replacement value rather than depreciated value for loss and 

damage and guaranteed claims settlement with 45 to 60 days of filing the 

claims. 

Table 1: Claims-Related Features of the Current Personal Property Program and Pilot Programs 

Program features 

Current personal 

property program 

Military Traffic 

Management 

Command’s 

Reengineered Personal 

Property Program 

Department of 

Defense’s Full 

Service Moving 

Project 

Navy’s Service 

Member Arranged 

Move Pilot Program 

Loss and damage claims 

Reimbursements: 

—Basis for valuing property Depreciated value Full replacement value Full replacement 

value 

Full replacement 

value 

—Maximum dollar value per move $40,000 $63,000 $75,000 $72,000 

Guaranteed claims settlement Not specified Within 60 days Within 45 days Within 60 days 

Sources: DOD (data); GAO (analysis). 

Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 33 GAO-03-367 Defense Transportation 

Table 2 compares the quality of service-related features. Some of the 

comparable features included emphasizing performance over cost in 

selecting transportation providers and prescreening of transportation 

providers. 

Table 2: Quality of Service-Related Features of the Current Personal Property Program and Pilot Programs 

Program features 

Current personal 

property program 

Military Traffic 

Management 

Command’s 

Reengineered Personal 

Property Program 

Department of 

Defense’s Full Service 

Moving Project 

Navy’s Service Member 

Arranged Move Pilot 

Program 

Counseling and arranging shipment services 

Single relocation 

coordinator 

No No Yes Yes 

Program management 

and counseling 

services provider 

Installation personal 

property shipping office 

Installation personal 

property shipping office 

Private-sector move 

managers 

Installation personal 

property shipping office 

Screening process for transportation providers 

Program emphasis in 

selecting transportation 

providers 

Lowest cost Performance Performance Performance 

Prescreening of 

transportation providers 

Very limited Yes Yes Yes 

Customer satisfaction 

surveys conducted and 

method 

Surveys are not 

conducted 

Survey company calls 

member 

Survey company calls 

member 

Service member returns 

survey via mail 

Visibility of shipments during relocation process 

Methods used to 

increase service 

members’ visibility of 

shipments during move 

process 

None Toll-free number to 

transportation provider 

Toll-free number to move 

manager and 

transportation provider 

Toll-free number to move 

coordinator and 

transportation provider, 

and member has pager 

Sources: DOD (data); GAO (analysis). 

 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 34 GAO-03-367 Defense Transportation 

Table 3 compares data reliability-related features. As noted, only one of 

the pilot programs had a data management system that provided reliable 

information to track individual shipments in transit and provide overall 

data on shipments and their associated costs. 

Table 3: Data Reliability-Related Features of the Current Personal Property Program and Pilot Programs 

Program features 

Current personal 

property program 

Military Traffic 

Management 

Command’s 

Reengineered Personal 

Property Program 

Department of 

Defense’s Full Service 

Moving Project 

Navy’s Service Member 

Arranged Move Pilot 

Program 

Availability and reliability of data on household goods shipments 

Reliable data 

management system to 

track individual 

shipments in transit and 

to provide overall data on 

shipments and 

associated costs 

No (current system is not 

designed to track 

shipments nor provide 

reliable shipment and 

cost data) 

Yes Not determined 

(developed but not fully 

operational–data 

management system 

needed additional 

refinement) 

Not determined 

(developed a database 

by end of pilot program 

but was not fully 

implemented or 

evaluated) 

Sources: DOD (data); GAO (analysis). 

Additional information on the current program and on each pilot program 

and its unique features follows. 

The current DOD personal property program, valued at over $1.7 billion 

annually, moves more than 600,000 shipments each year for military 

personnel and their families from the military services, Defense agencies, 

and the Coast Guard. DOD is the moving industry’s single largest 

customer. Managed centrally by the headquarters office of the Military 

Traffic Management Command and administered locally by about 200 

military and DOD transportation offices around the world, this program 

relies on over 1,200 domestic commercial carriers and more than 150 

forwarders for international traffic to provide moving and storage services. 

When loss and damage occur, military personnel can submit claims to 

their respective military service claims office. Based on depreciated 

values, the reimbursement rate is $1.25 per pound multiplied by the 

shipment weight, with a maximum amount of $40,000 per move. Military 

personnel have up to 2 years after receiving their shipments to file claims 

but must submit notice of loss and damage within 70 days of delivery. The 

Current Program 

Loss and Damage Claims 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 35 GAO-03-367 Defense Transportation 

current program does not have a specified time period in which the claims 

are to be settled. 

The current program provides counseling services and arranges the 

shipment and storage of household goods and unaccompanied baggage 

through government representatives, who are available to assist military 

personnel and their families at the origin and destination points of their 

moves. The current program does not have a real-time tracking system for 

shipments nor does it provide a single point of contact to manage the 

entire moving process; therefore, military personnel may interact with 

several people at the origin and destination offices during their relocation. 

The current system is not designed to select transportation providers on 

the basis of quality service; rather, transportation providers offering a 

minimally acceptable level of quality are generally selected based on the 

lowest rates. The program uses the Total Quality Assurance Program to 

develop quality scores for each transportation provider. Each local 

military installation distributes its traffic using a traffic distribution roster. 

Transportation providers are placed on the rosters for each channel 

(origin and destination areas) by order of rate level and quality score. 

Transportation providers who participate in the domestic part of the 

current program submit their rates as a percentage of the government 

tariff, which is nearly 20 years old. The providers who participate in the 

international part of the current program submit single factor or fixed 

rates per hundredweight of the shipments. 

The current program does not use customer satisfaction surveys as a 

means to evaluate transportation provider performance. To remain in the 

program, a provider must maintain a minimally acceptable level of quality–

a 90 percent score. Three factors are measured: on-time pickup, on-time 

delivery, and reported loss and damage to determine if points should be 

deducted from transportation providers and allocation of shipments 

should be reduced or terminated. 

The current program does not provide service members with real-time 

visibility of shipments during the relocation process. 

Counseling and Arranging 

Shipment Services 

Screening and Shipment 

Distribution Process for 

Transportation Providers 

Visibility of Shipments 

during the Relocation 

Process 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 36 GAO-03-367 Defense Transportation 

Personnel at origin and destination personal property shipping offices 

enter information on shipments to their respective Transportation 

Operational Personal Property Standard Systems. However, data in these 

individual systems does not include all shipments that occur during the 

year, and the systems are not accessible to all parties involved in the 

relocation process. Destination personal property shipment offices are 

forwarded information on shipments via the current system; however, 

payment data on these shipments is maintained in a separate system. 

In addition to not providing information on all aspects of individual 

shipments, the current program’s data management system does not 

provide DOD and the military services information about the types of 

shipments and related costs for planning and budgeting purposes. The 

following are examples of the current system’s limitations: 

• the format of the system makes compiling data from multiple sites 

difficult; 

• not all data is captured promptly; and 

• not all data and costs are captured/updated in the system. 

Under the current program, the military services reimburse carriers and 

forwarders for shipment-related costs from military personnel accounts. 

Personal property shipment office expenses and claims filed with the 

government are funded from the military services’ operations and 

maintenance accounts. 

Sponsored by the Military Traffic Management Command, the 

Reengineered Personal Property Program included outbound shipments 

for military and Coast Guard personnel departing from installations 

located in North Carolina, South Carolina, and Florida (excluding Tyndall 

Air Force Base). The pilot program ran concurrently with the existing 

program at these installations. The pilot program’s goal was to include 

50 percent of eligible moves from the above installations to continental 

United States and European locations. The remaining shipments were to 

be moved under the existing program. The Reengineered Personal 

Property Program was initiated in January 1999 and operated for 12 

months before data was submitted to the Transportation Command for 

evaluation. 

Reimbursement for loss and damage claims was increased from 

depreciated value to full replacement value, and the dollar amounts per 

Availability and Reliability 

of Data on Household 

Goods Shipments 

Funding Sources 

Military Traffic 

Management 

Command’s 

Reengineered 

Personal Property 

Program 

Loss and Damage Claims 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 37 GAO-03-367 Defense Transportation 

move increased from $40,000 under the current program to $63,000 under 

the Reengineered Personal Property Program. Additionally, the pilot 

program provided direct claims settlement between military personnel and 

their transportation providers and a requirement that transportation 

providers settle claims within 60 days of receiving claims forms from 

military personnel. 

Like the current program, the Reengineered Personal Property Program 

relied on personnel in the personal property shipping offices to provide 

counseling services and arrange for shipment and storage of household 

goods and unaccompanied baggage. A central contact point in these 

offices was not designated to manage the entire moving process; therefore, 

military personnel may have interacted with several people at the origin 

and destination offices during the relocation process. However, to improve 

customer service, the program’s Pilot Transportation Operational Personal 

Property Standard System provided real-time worldwide tracing 

capability. 

Greater emphasis was placed on performance in awarding shipments to 

transportation providers. Evaluation of financial status, elimination of 

high-risk companies, and consideration of providers’ past performance, 

rather than lowest bid, played the dominant role in selecting initial 

transportation providers to participate in this pilot program. 

Transportation providers who participated in the pilot program submitted 

their bids for various origin and destination routes as a discount from the 

commercial tariff. Prices were fixed for a year, with no provision for rate 

increases during the contract period. Awards were made only to 

transportation providers whose offers conformed to the solicitation and 

represented the best overall value to the government. 

The Military Traffic Management Command evaluated company 

performance quarterly and compliance with terms and conditions of the 

contracts annually. Subsequent performance reviews were conducted 

based on customer satisfaction surveys and claims data. After 

transportation providers received their minimum guarantee of business for 

the year ($25,000), future awards were offered to the best performers. 

Feedback was provided monthly to transportation providers, and those 

that became poor performers were no longer offered household goods and 

unaccompanied baggage shipments. 

Counseling and Arranging 

Shipment Services 

Screening and Shipment 

Distribution Process for 

Transportation Providers 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 38 GAO-03-367 Defense Transportation 

The Reengineered Personal Property Program provided the transportation 

provider’s toll-free number to military personnel to enhance visibility over 

their shipments throughout the relocation process. 

The Reengineered Personal Property Program implemented its central, 

Web-based Pilot Transportation Operational Personal Property Standard 

System in part to address problems associated with visibility of and 

availability of information on shipments during the relocation process. The 

pilot program’s data management system provided real-time access to 

both shipment and payment records. Access to the various modules of the 

system was granted to personal property shipment office personal at 

origin and destination locations, transportation providers, invoice 

certifying officers, prepayment auditors, military service headquarters, and 

military service claims offices and finance centers, based on each party’s 

need for the information. 

The system’s design allowed for entry of current address and telephone 

numbers of military personnel to improve the process of delivering 

household goods to a new residence. Data reliability was enhanced under 

the Reengineered Personal Property Program, but one problem noted 

during the evaluation was the need for military personnel to ensure that 

their contact information (phone number and address) was current during 

the relocation process. This had an effect on deliveries of household goods 

and the quality of life survey contractor’s ability to reach military 

personnel to ascertain their opinions about their relocation experience. 

In addition to providing information on all aspects of individual shipments, 

the Reengineered Personal Property Program’s data management system 

demonstrated the potential to provide DOD and the military services with 

information about the types of shipments and related costs managed 

annually for planning and budgeting purposes. 

The Reengineered Personal Property Program achieved stronger 

transportation provider commitment with long-term contracts, and it used 

contractor support to conduct quality of life surveys with military 

personnel moving under the pilot program and to perform audits of each 

invoice submitted by transportation providers. 

Like the current program, the military services reimbursed carriers and 

forwarders for shipment-related costs from their military personnel 

accounts. Transportation office expenses and any claims filed with the 

Visibility of Shipments 

during the Relocation 

Process 

Availability and Reliability 

of Data on Household 

Goods Shipments 

Other Reengineered 

Personal Property 

Program Features 

Funding Sources 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 39 GAO-03-367 Defense Transportation 

government were funded from the services’ operations and maintenance 

accounts. 

Sponsored by the Office of the Assistant Deputy Under Secretary of 

Defense (Transportation Policy), the Full Service Moving Project included 

outbound shipments for military and Coast Guard personnel and DOD 

civilian departing from locations in the National Capital Region, Georgia 

(excluding Robins Air Force Base), and Minot Air Force Base, North 

Dakota. The pilot program’s goal was to include 90 percent of the moves 

from these locations to continental United States and to European and 

Asian-Pacific locations. The remaining shipments were to be moved under 

the current program. The Full Service Moving Project began in January 

2001 and continued until its early termination in September 2001. Due to 

continuing delays in implementing this pilot program and DOD’s decision 

to terminate the pilot program in September 2001, the Full Service Moving 

Project had limited operational experience before submitting data to the 

Transportation Command. 

Reimbursement for loss and damage claims was increased from 

depreciated value to full replacement value, with the dollar amounts 

increasing from $40,000 per move under the current program to $75,000 

per move under the Full Service Moving Project. Additionally, the pilot 

program provided for direct claims settlement between military personnel 

and their transportation providers and a requirement that the responsible 

party (transportation providers or move managers) settle claims within 45 

days of receiving claim forms from military personnel. 

Unlike the current program and other pilot programs, the Full Service 

Moving Project tested the use of private-sector relocation companies 

(move managers) for outsourcing traditional transportation services 

(counseling and arranging for the shipment and storage of household 

goods and unaccompanied baggage) performed by origin and destination 

personal property shipping offices. The pilot program’s goal was to 

provide a single point of contact (move manager) for military personnel 

and transportation providers to contact throughout the relocation process. 

The Full Service Moving Project made major changes to the existing 

transportation provider approval, rate solicitation, and traffic distribution 

processes. The pilot program emphasized best value and placed more 

weight on performance (70 percent) than cost (30 percent) in determining 

The Department of 

Defense’s Full Service 

Moving Project 

Loss and Damage Claims 

Counseling and Arranging 

Shipment Services 

Screening and Shipment 

Distribution Process for 

Transportation Providers 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 40 GAO-03-367 Defense Transportation 

which transportation providers would be awarded shipments. The pilot 

program contracted with a financial services company to conduct financial 

and performance assessments of transportation providers and move 

manager companies that wanted to participate in the pilot program. For 

approved transportation providers, rates were established for a 1-year 

cycle. The providers submitted their rates as a discount from the 

commercial tariff for domestic shipments and negotiated single rate 

factors for the overseas locations. Approved move managers were 

awarded 2-year contracts with 1-year options. The move management 

companies competitively bid their fees as flat rates, depending on whether 

they were responsible for claims settlement or the transportation provider 

carried this liability. Also, different fees were established for domestic and 

international shipments. 

The Full Service Moving Project used survey data from all personnel 

participating in the pilot program to determine future percentages of 

shipments that would be allocated to the transportation providers. The 

pilot program also planned to use survey data on move manager 

performance to determine future participation in the pilot program and 

incentive payments. The Full Service Moving Project’s Web-based Best 

Value Distribution Database maintained the transportation providers’ 

quality and cost scores based on survey information and costs associated 

with prior shipments. Move managers used this data to assign future 

shipments. However, in some instances (i.e., for group moves, when 

meeting small business requirements, when there was a lack of 

transportation provider capacity to handle shipments offered, for multiple 

shipments to a single transportation provider, and for international 

shipments to areas without an established rate), move managers were told 

to deviate from the information provided by the data management system. 

One of the goals of incorporating move managers into the relocation 

process was to provide real-time information to military personnel and to 

transportation providers regarding the status of household goods 

shipments. The move managers, unlike the current program’s personal 

property shipping office personnel, were responsible for the entire 

relocation process from the point of origin in establishing entitlements, 

arranging for transportation providers, and handling other personnelrelated issues, to the destination in overseeing deliveries, approving 

storage, and either settling claims or assisting military personnel with 

issues involving settling claims with the transportation providers if the 

liability fell with the providers. Working with both military personnel and 

transportation providers, the move managers used contact information to 

keep military personnel informed of their shipments’ status and to 

Visibility of Shipments 

during the Relocation 

Process 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 41 GAO-03-367 Defense Transportation 

coordinate the delivery of the shipments at the destination. Additionally, 

as part of the pilot program, all participants were provided a toll-free 

number to maintain visibility over their shipments throughout the process. 

In addition to move managers, the Full Service Moving Project’s Webbased Best Value Distribution Database was implemented to address 

problems associated with visibility of shipments during the relocation 

process. The pilot program’s data management system had access to both 

shipment and payment records via interface with US Bank’s PowerTrack 

and the move managers’ systems. Access to the pilot program’s data 

management system was granted to move managers, invoice certifying 

officers, military service headquarters, and military service claims offices 

and finance centers, based on each party’s requirements. 

Move managers were responsible for keeping the status of the shipments 

current in the pilot program’s data management system. However, the 

move managers did not always update this information in the system. 

Further, the ability of the move manager to contact the service member 

was directly affected by the information provided by the member. 

The Full Service Moving Project’s Web-based Best Value Distribution 

Database was anticipated to provide DOD and the military services 

information on the types of shipments and related costs managed annually 

for planning and budgeting purposes. Unlike the Reengineered Personal 

Property Program where various parties in the relocation process entered 

data into that pilot program’s data management system, the majority of the 

data in the Full Service Moving Project’s data management system was 

predicated on the move managers gathering and entering the information. 

The Full Service Moving Project achieved stronger transportation provider 

commitment with long-term contracts and faster payment of invoices; it 

offered binding cost estimates for shipments; it used contractor support to 

conduct quality of life surveys with military personnel moving under the 

pilot program and to perform audits of each invoice submitted by the 

transportation providers; and it offered optional relocation referral 

assistance for activities such as the purchase and sale of service members’ 

residences. 

Move managers were required to perform prepayment audits and business 

rules were established for an automatic payment method. Payment 

methodology was predicated on the move manager entering the expected 

invoice into PowerTrack and the transportation provider submitting a 

Availability and Reliability 

of Data on Household 

Goods Shipments 

Other Full Service Moving 

Project Features 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 42 GAO-03-367 Defense Transportation 

notice of delivery and invoice. Payment timeliness was also driven by the 

timeliness of documentation submitted by the transportation providers. 

On some invoices, the contracting representative had to review and certify 

payment in PowerTrack. This occurred when the match showed a 

difference of more than $1.00. 

For this pilot program, the military services reimbursed carriers and 

forwarders for shipment-related costs from military personnel accounts. 

These accounts were also used to fund move manager expenses. Any 

claims that might have been filed with the government would have been 

funded from the military services’ operations and maintenance accounts. 

Sponsored by the Navy, the Service Member Arranged Move Pilot Program 

included only domestic outbound intrastate and interstate shipments for 

Navy personnel moving from its installations located at Puget Sound, 

Washington; San Diego, California; Norfolk, Virginia; New London, 

Connecticut; and Whidbey Island, Washington. One of this program’s 

objectives was to offer Navy military personnel a set of moving choices to 

meet their specific needs. This pilot program was one of three choices 

offered. Military personnel moving from the above locations could choose 

to move under the current personal property program, move their own 

household goods, or participate in the pilot program. The pilot program 

was initiated in April 1997 and began operations in January 1998. Because 

the Navy decided not to scope the Service Member Arranged Move Pilot 

Program comparable to other pilot programs (i.e., operational at multiple 

military services) and the pilot program did not provide data as outlined 

by the Transportation Command’s evaluation plan, its inclusion in the 

Transportation Command’s evaluation was limited to a qualitative 

assessment. 

Reimbursement for loss and damage claims was increased from 

depreciated value to full replacement value, with the dollar amounts per 

move increasing from $40,000 under the current program to $72,000 under 

the Service Member Arranged Move Pilot Program. Additionally, the pilot 

program provided direct claims settlement between military personnel and 

their transportation providers and a requirement that transportation 

providers settle claims within 60 days of receiving claims forms from 

military personnel. 

Funding Sources 

Navy’s Service 

Member Arranged 

Move Pilot Program 

Loss and Damage Claims 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 43 GAO-03-367 Defense Transportation 

Like the current program, the Service Member Arranged Move Pilot 

Program also relied on personnel in the personal property shipping offices 

to provide counseling services and arrange shipment and storage of 

household goods and unaccompanied baggage. However, the shipping 

office personnel at the origin installations participating in this pilot 

program served as the single point of contact coordinating the service 

members’ moves and remained available throughout the move to handle 

all issues, including claims. Unlike those participating in the current 

program and other pilot programs, service members participating in this 

pilot program identified the transportation provider they desired to handle 

their household goods shipments after they completed their reviews of 

participating providers’ vendor quality books (containing provider 

information and marketing materials) and of surveys completed by 

previous pilot program participants. The personal property office 

coordinator assigned to the service member had to concur with the 

member’s request, and the coordinator made actual arrangements with the 

carrier. 

Staff in the program management office and personal property shipping 

offices participating in the Service Member Arranged Move Pilot Program 

initially screened transportation providers that wished to participate in the 

pilot program based on providers’ performance rather than low cost. 

Letters of agreement were adopted to streamline the contracting process 

and improve the quality of the move for Navy personnel. According to pilot 

program officials, these letters of agreement provided commercial best 

practices and enabled lessons learned from prior pilot program efforts and 

industry to be incorporated into the Navy pilot program. Actual contract 

awards were made on a case-by-case basis based on the best value 

decision for each move. Transportation providers used commercial tariffs 

in developing their bids for each move. 

Transportation providers approved to participate in the pilot program 

submitted their bids for various origin and destination channels using 

commercial tariffs. Bids were rejected if they did not fall within acceptable 

percentage discounts. Feedback was provided monthly to transportation 

providers, and those that became poor performers were no longer offered 

household goods and unaccompanied baggage shipments. Subsequently, 

service members who were planning their upcoming moves relied on 

information contained in a nine-question survey that other service 

members had completed after their moves and claims process ended. 

Service members who volunteered to participate in this pilot program had 

to manually review carrier books, which included documents provided by 

the carriers and prior surveys completed by service members who had 

Counseling and Arranging 

Shipment Services 

Screening and Shipment 

Distribution Process for 

Transportation Providers 
Appendix II: Overview of Current Personal 

Property Program and Pilot Programs 

Page 44 GAO-03-367 Defense Transportation 

been moved by the carriers. According to pilot program officials, six 

carriers were terminated or canceled from the pilot program–four for 

providing poor service and two for price gouging. 

The Service Member Arranged Move Pilot Program relied upon the 

shipping office personnel, who served as the single point of contact 

coordinating the service members’ moves, to maintain visibility of 

shipments during the relocation process. In addition, the pilot program 

provided both the personal property shipping office’s and transportation 

provider’s toll-free numbers, as well as a pager to service members to 

enhance the members’ visibility of their shipments during the relocation 

process. 

The Service Member Arranged Move Pilot Program did not initially 

develop an alternative data management system to capture data on 

shipments and payment records. By the end of the pilot program, the Navy 

had developed a database to capture shipment data; however, the system 

was not fully implemented or evaluated. 

Unlike the other pilot programs, the Navy pilot program used local 

personal property program personnel rather than third parties to review 

all invoices for payment. Navy personnel who participated in the pilot 

program completed their own surveys, mailing the paper forms to their 

respective personal property program offices. 

The Service Member Arranged Move Pilot Program was designed to offer 

all shipments to small businesses, to provide direct claims settlements 

between Navy personnel and the transportation providers, to make faster 

payments to transportation providers through government purchase cards, 

and to establish a stronger commitment from transportation providers by 

offering long-term contracts. 

Like the current program, the Navy reimbursed carriers and forwarders for 

shipment-related costs from its military personnel account. Personal 

property shipment office expenses were funded from the Navy’s 

operations and maintenance account. While information on claims filed 

with the government was not provided, under this pilot program such 

expenses would also be funded from the operations and maintenance 

account.

Visibility of Shipments 

during Relocation Process 

Availability and Reliability 

of Data on Household 

Goods Shipments 

Other Service Member 

Arranged Move Pilot 

Program Features 

Funding Sources 
Appendix III: Comments from the Department 

of Defense 

Page 45 GAO-03-367 Defense Transportation 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 46 GAO-03-367 Defense Transportation 
Appendix III: Comments from the Department 

of Defense 

Page 47 GAO-03-367 Defense Transportation 
Appendix III: Comments from the Department 

of Defense 

Page 48 GAO-03-367 Defense Transportation 
Related GAO Products 

Page 49 GAO-03-367 Defense Transportation 

Defense Transportation: Final Evaluation Plan Is Needed to Assess Alternatives to 

the Current Personal Property Program. GAO/NSIAD-00-217R. Washington, D.C.: 

September 27, 2000. 

Defense Transportation: The Army’s Hunter Pilot Project Is Inconclusive but 

Provides Lessons Learned. GAO/NSIAD-99-129. Washington, D.C.: June 23, 1999. 

Defense Transportation: Plan Needed for Evaluating the Navy Personal Property 

Pilot. GAO/NSIAD-99-138. Washington, D.C.: June 23, 1999. 

Defense Transportation: Efforts to Improve DOD’s Personal Property Program.

GAO/T-NSIAD-99-106. Washington, D.C.: March 18, 1999. 

Defense Transportation: The Army’s Hunter Pilot Project to Outsource Relocation 

Services. GAO/NSIAD-98-149. Washington, D.C.: June 10, 1998. 

Defense Transportation: Reengineering the DOD Personal Property Program.

GAO/NSIAD-97-49. Washington, D.C.: November 27, 1996. 

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